Power Lunch - Tech Trade Takes A Hit 01/13/25

Episode Date: January 13, 2025

The Dow is climbing higher today, outperforming the market, while the Nasdaq slides as traders continued to sell off major tech stocks that have powered the recent bull market. We’ll cover all of the angles for you. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

And welcome to Power Lunch. Sure, the Dow may be higher. Nobody cares about the Dow, but another tough day for your big tech money this year. But NASDAQ down again. It's now close to wiping out all of the gains it has made since the election. And many big-name stocks just keep going down. That includes Kelly, some of the big money makers last year. We're going to dig into why on all of this. I think it's significant that we're almost round-tripping. Weighing on stocks, big time, has been rising bond yields. The yield on the 10-year, about 4.8 percent earlier on. Highest level, in more than a year. Dollar strong as well. Highest level there, with a couple of exceptions since the 1980s, really. The rate cut is dead. Long live. The rate. The rate cut. All right. Well, one thing that is rising is oil. Crude oil prices keep creeping closer to 80 bucks a barrel yet again. It may have to do with not only Russia, but also Canada. Kelly, we're going to explain ahead. And I will just add the fact that they're rising with the strong dollar makes that rise even more significant. In real, that's a big headwind, and it is blowing past it. shares of Honeywell are also higher. And it reports the company may split itself under pressure

from activist shareholder Elliott management. Again, goes back to GE. It split itself into three. Those three individual companies have done very well, probably better than expected since that. We've had other companies, FedEx, I think, looking at spinning out maybe that ground division. So here comes Honeywell, maybe some similar. I know we got the story coming up. But just remember, if bankers don't make money by putting companies together, bankers will make money by breaking them up. breaking them apart. We start with the markets, though, as investors do get ready for a busy week of economic data and the start of earnings season. The Dow's up about 200 points, but like Brian said,

it's the NASDAQ where we see the pain down three quarters of a percent right now, S&P fighting back towards positive, still down five points. And earnings are expected to be stronger, or to say they better be strong because we have some pretty high Wall Street S&P targets, and our next guest is the most bullish on Wall Street with a year-end price target of 7,100. Here to make his case is John Stolfuss, the chief investment, strategist at Oppenheimer. John, it's great to see you. And how do we get there? Well, Kelly, very simply, it's got to be good fundamentals. And that means a sustainable level of economic growth, the Fed making progress on inflation, business doing what it does best,

do business and the consumer remaining resilient and jobs numbers resilient. And on top of that, effectively what you're looking for is an environment where jobs keep growing. We've got all of that now, but we've got a bond market tantrum based on the fact that there's some very heavy-duty players who want the Fed to lower rates much more than the Fed currently wants to do. And we think the Fed's doing the right job, and we think they will do it. Because I don't think they're going to force Jerome Powell to do anything that he doesn't see is warranted.

So you think that's all – I don't want to say all this is. You think it's a tantrum to make sure the Fed doesn't cut? Wait, to make sure that the Fed, huh? Wait, tell me again. It's an emotional reaction, and it's also a tactical move by traders. I mean, there's two types of investors and a very many types of investors. But the two types of investors, basically, you've got traders tend to be leveraged. The leverage, the cost of leverage has gone up significantly since March 2022,

even with the three rate cuts that we had earlier. this year. And then you have intermediate to long-term investors, for one thing, I mean, where the 10 year is now, consider the fact what it really means we're at levels on interest rates where bond issuers, whether it's the U.S. government, municipalities, corporate entities, or others, effectively are paying for the privilege of borrowing money again on a fairly normalized rate. Well, John, John, to Kelly's question to open up the interview, hi, by the way, thanks for coming on. What happened? Borrowing costs for 10-year bonds are now 1% more than they were four months ago. That's a gigantic move for the bond market. What happened? What happened effectively is,

the traders thought that the Fed would be cutting more times than it appears that they will at this point in time. They look at it. They thought it was going to be much more than two times, and it looks like the Fed could come. maybe once in mid-year, once at the end of the year. But you've got to figure traders, especially leverage traders, and I'm thinking to hedge funds, what do they do? They're highly leveraged. They've placed bets. All of a sudden, the reality is based on that hot jobs number that we just had, based on the

CPI expectations, based on what we were seeing last week in terms of the jobs number, all of that says economy is doing better than expected. showing resilience between the Fed probably won't cut. You got to reposition. So you got to sell positions that were bullishly placed for rates to come down more than they're likely to. That's a lot of what's happening right now. And you even hear people talking about recession risk at the current levels where the 10-year

Treasury is. We've been here before 2020, 2021, 22, 23, 24. And now in 25, we still. still haven't had a recession. Yeah. Judd, it's not, you know, I know people always say, oh, earnings estimates of 15. Maybe it happens. Maybe it doesn't.

We're always here. We always go one way the other. It's not the earnings that I kind of get stuck on. It's the news flow that might come out of the incoming administration. Because when you look at the plans, you know, if you look at what Stephen Moran is writing about and saying it's not, it's going to be up to him, but he's going to be an important player in this administration. And he's talking about, yeah, there might be taxes on treasury bonds.

You know, yeah, we're looking to raise revenue. Yeah, this, it's like, this. This is a clear plan and focus to try to change the prevailing global monetary system of the past 30 or 40 years. I can understand if the market's a little jittery around that. That's what makes me wonder more about getting to 7,100, even if the fundamentals for companies in the near term are pretty good. You know, Kelly, you have every right to think the way you do, but I disagree with you. I think, if anything, I think the administration here is putting all the cards on the table and is shuffling things around how they actually come out of this. I'm not an apologist for any administration, whether it's the Biden administration or the Trump administration.

But I must say, I think Trump is interested in his legacy here. I don't think his intention or any intention of the members of his future cabinet are likely to be to cause a recession. And I don't think Jerome Powell's planning on it right now. I do think that innovation that is powering everything will help corporations. innovation that exists today but is growing almost on a day-to-day basis will likely help companies and the consumer navigate a period of transition, which is what we're in. You know, I've been in this business since 1983 when Paul Volcker was in his second term, so I've been through many rate cycles.

And this is, you know, this is to be expected. And the end of the curve that's unsatisfied here will say rate cycles. are too high. The Fed needs to cut. And the Fed's going to do what it feels right. And this is the Bernanke legacy Fed with Jerome Powell at the helm that really is remarkably communicative. And he's been very straight so far. And to be clear, I hope you're right. I very much hope you're right. That would be awesome. John, thanks. Appreciate it today. John Stolfeus with Oppenheimer Asset Management. And by the way, quickly, before we get to rip, one thing I would say about John, he's done it since 82. That's where I love experience. And by that, I mean, age. The Dow

closed 1982 at just over 1,000 points. So through all that stern on drang, right, all the stuff we talk about every day, guess what's happened? The Dow has gone from 1,000 to 42,000. Right. And I totally, and this is why I was joking the other day. Like, I've had to come around to that point of view because I know in the long run they're right, but in the near term. One day, you kids will get it right. Like, by the way, there's nothing wrong with a little bit of age. All right. Speaking of, let's see how bonds are aging, because we've seen a big

rise and yields as we've been bidding up, I guess, or setting up Rick Santelli to this week's big inflation data, right? There's nothing wrong with age when it comes to humans too in the markets because, by the way, it's experience. Yeah, well, we've experienced a lot of debt and deficits, which is one of the reasons I think we're looking at these rates. You know, it's fascinating. Look at two's tens and thirties on a year-to-date charts, starting on Jan January 2nd. I know that I may, the only one who finds this so interesting, but when do you think the low yields for the year were made? Yeah, the very first day of trading in 2025. And I've had an informal poll on why rates are going up. And number one answer, and Kelly referred to this in

the last segment. Good job, Kelly. Policy uncertainty. And that uncertainty is viewed through the lens of half empty. Tariffs are going to make the dollar go even higher. And, and And it's all going to be super-duper inflationary. Why do I bring that up as the number one answer? Because that's how quickly things can change when we get a better GPS on exactly what the new Trump administration intends to do. And the number two answer was rollover risk. And number three answer was tied, inflation and a better economy.

As you look at a two-year note, it should it close at current levels be the highest yield close since the end of July of last year. If you look at tens and thirties on the same chart there, well, if they close at current levels, it'd be the highest yield close since Halloween, 2023. And finally, the dollar index. And believe me, this is the most talked about market that when I discuss with sources, what's going on when the Trump administration comes in. The fact of the matter is we're closing in on 110.

If the dollar closed here, of course, would be the highest close since the first couple of weeks of November in 2022. It's on pace for its fifth consecutive higher session close, and I don't see anything in sight until we get better GPS on Trump to make this trade disappear. Kelly, Brian, back to you. Rick, thank you very much. All right, folks, A block down. We have got a long way to go and on deck why what's happening right now in China

could impact your money here. Plus, speaking of China, if TikTok does get shut down and it could happen, We're going to show you another China-based app that is suddenly red, hot. We're back right after this. This year, taxpayers in 25 states are eligible for the free tax filing program, IRS Direct File. To qualify, you must have income from W2 wages, Social Security, unemployment, compensation, retirement, or interest income, and claim the standard deduction. For CNBC, I'm Sharon Epperson.

All right, welcome back. We're going to call this next chart WBI, wonky but important. This chart is the difference between 10-year borrowing costs here in the United States against 10-year borrowing costs in China. And as you can clearly see, well, trust us if you're on the radio, there is about a 3% gap between the same borrowing costs here and in China. It's only 1.65% on their 10-year versus 4%. 0.78% here. Okay. What does that mean? Let's talk about it with Adam Kobasey, his founder and editor-in-chief of the Kobasey letter. Always a must-follow as well on social media. Bring these cool charts and love having you on, Adam. It's a neat stat, okay? But what does it mean? What does that tell us

either about us here in the U.S. or China? Yeah, well, first, thanks for having me. It's definitely a wild start to 2025. I think it's pretty incredible that the global economy right now is more interconnected, intertwined than it has ever been. But major economies around the globe are seeing exactly different situations and backdrops between, and you just underscore that. Look at China. That 300 basis point gap in rates is massive, one of the biggest we've ever seen. And they're actually dealing with six straight quarters of deflation, the exact opposite of what we're dealing with now with inflation back on the rise, they haven't had six straight quarters of deflation since 1999. So it's a complete opposite situation.

They have stimulus now. The consumer sentiment is at record lows. And I think eventually these economies can't be siloed anymore. I think it's going to start to spread a little bit. With that said, I think a lot of people in the U.S. right now would say, yeah, I'll take lower prices. but it's also. Well, deflation sounds nice on paper. You go to order a burger or dinner or go to the grocery store.

You're like, man, I wish we had lower prices. But they come with a cost, right? Prices tend to go down because of bad things. So as much as we would like the cost of things to go down, generally, not always, but generally deflation can also be a dirty word. Absolutely. So look back to the Great Depression, right? Actually, even around 2008, 2009, around the financial crisis, we saw some deflation,

but China is living proof right now of how catastrophic that can be. Their high-yield real estate index is down over 80% from the high. There's literally ghost towns of new properties being built, and no one wants to buy these properties. Why? Because if you have a dollar today and it's going to be worth more tomorrow, why spend that money today? It's the exact opposite of deflation, right?

And as a result, the economy effectively comes to a halt. And even with these widespread stimulus measures being unveiled by China, they still can't escape deflation for now. So it's, you kind of want to, you don't want to be on either end of the spectrum. You kind of want to be in the middle. It's like a pendulum, right? It swings to inflation, but then it swings back. And you don't want to swing into deflation.

You kind of want to softly fall back into that Fed's 2% target, which is why obviously that's been a lot more difficult to achieve, and they're still in the process of achieving that. necessarily want to see falling prices after all. And it was interesting that Xi Jinping reportedly himself asked his leadership, what's the big deal with deflation, which tells you there's not going to be a big impetus to fix it. But Adam, I was just going to pick up on what you said about pendulum.

I mean, it feels to me like everything is going to such an extreme. So now China's in more deflation. Their currency is weakening further. Our dollar is strengthening. That's going to be an even bigger headwind for manufacturing and so forth, right as Trump and team are about to take office. So everyone who talks about how we're so imbalanced, we're too much of a consumer economy. Like, the things happening in the market today are making.

all of that worse. And now they have to come in, try to make it better without upsetting the Apple cart. I mean, good luck. Yeah, absolutely. I mean, look at the U.S. Dollar Index. We're now at 110. I think you guys were talking about that earlier. That's a multi-year high. I think that's a 24-month high. That makes doing business with the U.S. extremely expensive for people that are using currencies other than the U.S. dollar and having to convert their currency to dollars. But also, it's interesting because then you see assets like gold. Gold is, in U.S. dollar terms, continues to be incredibly strong, now trading around 2,700, in a market where the 10-year note yield is up 100 basis points, and the U.S. dollars up 10% in three months. So that's something we've also been looking at.

So I think from a trader's perspective, these large moves and these big contrasts that we're seeing between major global economies actually create opportunities to trade. But it's definitely not something that the Fed is too excited about, is they now have all three measures of inflation back on the rise. You have one month, three month, and six month annualized measures of CPI, PC, and PPI inflation, actually accelerating even more and now rising towards 4%. I think it's possible we could see rate hikes return in 2025. A lot of our viewers and listeners probably don't care about bond yields, right? But maybe they should because they probably pay taxes. what is this going to mean to interest costs for the U.S. government, Adam?

I mean, during COVID, when interest rates collapsed, we spent trillions. Now, some of that did go to COVID response. We need that. A lot of it, as we know, did not. A lot of that, those trillions will come do. Just like credit card debt or mortgage debt, the bonds end and they have to be refinanced. We know that interest costs for U.S. debt is spiking and spiraling higher already. a lot of that has be refinanced. Those low rates are gone. What is this going to mean for how much money

the Federal Reserve spent, and by the way, by Federal Reserve, I mean taxpayers, because I also want to remind our audience. And I'm going to say something very loud and clear. There is no federal government money. There is only our money. How much are we going to be spending on all this debt? Absolutely. So the $4 trillion of stimulus from the pandemic, I at the time called and continued to call it one of the largest involuntary taxes in U.S. history, taxation through inflation, that is. And what's happening now is we have over $1 trillion per year and just interest costs on that debt. And as for decades, the U.S. government was effectively borrowing for free. Barrowing costs were below 2%. Now they've more than doubled in some cases. And that means that this

debt is no longer, quote, quote, free money, right? It's now a lot more expensive than it was. And it's growing at a much faster pace than it was. What does that mean for consumers? Well, that's a lot of the reason why treasury yields are rising. When the government needs more money, when they want to spend more money on deficit spending, they have to issue bonds. And what does that mean? You're driving up the supply of bonds, which drives up yield and lowers price. And those same bonds are to then translate into a lot of different interest rate markets impacting consumers. Look at mortgage rates. Mortgage rates are back on the rise now with the rise. and treasury yields, look at credit card debt, look at all these various forms of debt.

They all move together. And effectively, government spending and deficit spending is one of the most inflationary things that we can see. And right now it's happening at record levels. I think that's step one is reducing deficit spending to get inflation, at least somewhat under control and get these yields lower. Adam, the Kobasey letter, Adam, we appreciate it. Thank you.

Thank you. Now, the head of policy for Open AI says the AI race with China is one the U.S. absolutely has to win. Comes as the company is making some policy recommendations to the incoming Trump administration. Kate Rooney joining us with more. And Kate, in contrast to the Biden administration, which is leaving office with some AI plans or programs that seems the tech world is not thrilled about. Yeah, Kelly, no, that's a great point and backdrop to all of this with the new administration coming. And the gist of this blueprint that OpenAI put out is really geopolitics, arguing that the U.S. needs to invest in AI infrastructure to beat China. So OpenAI's head of policy, Chris Lehane says there is an estimated $175 billion from global funds ready to invest in this type of infrastructure, says if the U.S. does not attract that cash, it's going to flow into China-backed projects and strengthen the CCP's global influence.

Here's what Lehane told me earlier from D.C. This is a race that the U.S. absolutely has to win. I'm confident that the U.S. will win and the Democratic AI will prevail. But at the end of the day, to make that happen, we need to have the infrastructure in this country. Infrastructure is destiny. That infrastructure gives us the raw computing power to make sure that the U.S. continues to lead and that we're able to build Democratic AI all over the world. He also says that that $175 billion, it's mostly from foreign investors.

So think of sovereign wealth funds, pensions, private capital, says the key to winning is through chips, data, and energy. It's mostly going to be, he says, through the private sector. But he does argue here for some public incentives and some regulation that would establish clear rules of the road. There's a line in there about models being trained with neutral political values, as they put it, as the default, trying to really counter the woke AI criticism. as you mentioned, and with a new administration, they are playing to that group, at least in this report. I also asked him about whether Open AI competitors, take Elon Musk, for example, would support the effort. He says anyone who wants to see the U.S. win over China is going to want free Democratic AI to win over authoritarian, guys. All right. Kate, thank you. Kate Rooney.

We appreciate it. As we head to break, check out shares of Edison International down 11 percent today, worse today in about four years. Traders continuing to sell the name amid the Los Angeles wildfires. Even though there's no evidence the utility company was involved, more than 60 square miles have been scorched. People want to know what happened. We'll take a look at the damage report next. Well, the devastation out West is difficult to comprehend and maybe even more difficult to see. Street after street of nothing but burned out shells of homes. I just how Katessa Brewer describes the scene because she is out in Los Angeles with what we know, what we still don't know, and how all of this may eventually be rebuilt.

Contessa. Yeah, I got to say, Brian, when you say street after street, I've been to a lot of disaster zones. This one only compares, in my experience, to what I saw after Katrina, and I've never seen it as the result of a fire. But here we are, and there are still red flag warnings for wind, in effect right now through Wednesday. Here in the business district of Pacific Palisades,

the first step to getting back to business is safe. So what we've seen is they're cutting down damage power lines and literally using rope to just tie up and and brace these telephone poles so that emergency traffic can get through on these streets. Governor Gavin Newsom's emergency declaration this weekend clears the way for rebuilding. He has ordered state agencies to streamline the permitting process. Accuether forecasts an economic impact as much as $150 billion in terms. Assured losses could approach $30 billion, according to the latest estimate from Wells Fargo. Why such a big disparity between those two numbers? In part, it's because of the massive problem of homeowners being underinsured or not insured at all.

Next week, we should get some more solid figures and an insight from insurers in terms of exposure when travelers kicks off earnings season for the industry with quarterly earnings on Wednesday. There you can see some of the most exposed publicly traded companies. But again, their exposure to these fires may differ from what their exposure is across the state. Brian? And there's so much here, Contest, and I want to be very clear. We have no idea what caused the fire where the liability may be. We heard the Edison International does not operate in the Palisade side.

That would be L.A. Department of Water and Power. There's a lot we don't know and I want to be very careful here. But to your point on underinsured, go a little more deep into that. We know this is one of the most expensive and pricey areas in the United States. Let's say I live there, and by the way, I have a lot of friends that did live there. Their homes have burned down. And let's say they value the home in a million dollars for insurance reasons, but the home is $5 million to rebuild.

They're on the hook for that $4 million gap, even if insurance pays, correct? That's right. exactly right. There may be some latitude in terms of inflation and it depends on who your insurer is, but Brian, you're absolutely right. Where people will be underinsured, they may have thought they had full coverage their home, but because of the inflation of construction materials, 37% higher over the last five years, construction labor at 35% over the last five years. It may be very costly to rebuild their homes. Plus, you have to add in now the fact that the demolition includes basically a hazmat site.

This is a toxic waste site from the flame retardant and from the fires that burned. And all of that has to be cleaned up before any rebuilding on a residential site can commence. Just brutal scenes. If you know the area in particular, it is so difficult to see. Consessive Brewer, I don't know how long going to be out there, but important story. We're glad you are. Thank you very much. As Kelly said, going into the commercial break, also wants to be a lot of.

to look at Edison International. That is the parent company of one of the utilities. Now, want to be very clear, the CEO was on CNBC earlier today. He talked about two fires, the Hurst, Kelly, and the Eaton fires. This is not the Palisades fire. Edison International does not operate in the Palisades region. If you live in that area, you get your power from the city, from the LA Department of Water and Power. It was a 2007 Malibu fire. They talked about burying power lines because of that. Not sure they got anywhere with that. Either way, Edison, though, is down because of the potential liability over the Hearst

and or Eaton fires, which are on the other side of the hill, if that makes sense. You've got to know L.A., and the CEO is on. There is a fund, and he said basically the fund is, is their liability is capped at the fund level, but the market cap of this company has lost over $10 billion now at this point. So I think there's a wildfire liability fund that was set up, $21 billion fund that is there to help people impacted by the fire, along with a liability cap for investor in utilities like Southern California Edison. Now, Carl, that liability cap today is $3.9 billion for any events happening over a three-year period, yet our market cap has decreased by $9 billion since the start of the

fires. Now, Bizarre also said that Edison is not showing any electrical anomalies prior to the beginning of the Eton fire, but there are several fires burning likely, all with different causes. The investigation is still in the very early stages. Bloomberg is reporting Anderson International was hit with a lawsuit, blaming the provider's equipment for igniting one of the wildfires. That's normal, by the way. It doesn't, it doesn't imply any guilt whatsoever on Edison's part. They just want everyone that, a lot of times these lawsuits are filed so companies will save all communication related to a fire.

Yep. They're under, obviously, the market microscope right now. Oh, absolutely. The market wants to go first to whatever they think could come. They're trying to discount that risk. Coming up, Moderna down big today. We're stock in the S&P last eye check, down 20 percent, cutting sales guidance seeing a rapid decline in demand for its COVID vaccine. Moderna problem or is it spreading to rivals like Pfizer? We'll speak to Pfizer CEO about that and other news items next. Welcome back to Power Lunch. I'm Bertha Coombs with your CNBC News Update. New details are emerging this afternoon about a potential ceasefire between Hamas and Israel.

The White House says negotiators are on the cusp of agreement and that President elect Trump's team is participating in those talks. A new study finds the risk of developing dementia is increasing as Americans live longer. The research was published today in the journal Nature Medicine. It estimates around 42% of men and women would develop dementia in their lifetimes, with cases predicted to double by 2060. And other recent research underscores the risk remains highest for women and African Americans. Texas sued all state today over accusations.

the insurer tracked drivers through their cell phones without consent, and then used the data to justify higher car insurance charges. The lawsuit claims Allstate paid mobile app developers millions to create the world's largest driving behavior database with information on more than 45 million Americans. Allstate did not immediately comment on the claims. Kelly? All right, Bertha, thanks very much. Bertha Coombs.

Shares of Moderna are sinking nearly 20% after the company lowered its 2025 sales guidance by a billion dollars. The stock is down 70% in a year amid waning demand for its COVID vaccine. Pfizer shares are also down nearly 8% in the same time frame, and it's trying to rebuild itself after a sharp decline in sales of COVID products and pressure from an activist investor. For more, we're joined by Pfizer CEO Albert Borla with our own Angelica Peebles. They're out of the JPM Health Care Conference in San Francisco. Welcome to you both, Angelica. Hey, Kelly, that's right.

We're out here with Dr. Albert Borla. Thank you so much for being here today. So last year, 24, you said it was all about execution. So what is the focus this year? The focus is pipeline. Last year, it was execution on commercial mainly front so that we can regain market shares that we felt that we could have done better in 23.

And we achieved that very well. In 24, it was execution on commercial. 25 is execution on pipeline. How are you going to do that? Well, we have a lot of changes that we implement it in 2024, but when it comes to R&D, we have new leadership of R&D. We have just reorganized our R&D organization into four end-to-end units, like the oncology unit that we had before. Oncology was the most successful unit of Pfizer in terms of R&D productivity, medicines that really make a difference in human lives. It was organized as end to end from early to late.

Now we have organized like for biotechs, all the units in Pfizer like that. And of course, we are having 13 new phase three studies that are expected to start this year and eight phase three studies that we expect to read out this year. So a lot of catalysts. And how much of that change comes from having an activist investor in your stock with Starboard, and what changes, if any, that they've recommended are you actually implementing? Look, I try to maintain a productive engagement with them, and so far it is productive, respectful from both sides. So we discussed their ideas. They had some ideas that I found good and we are doing it.

I don't want to speak on the specifics because of private discussions that we had with them. But those are things that anyway was part of a longer plan that we were having when you realized in 23, that COVID revenues are not going to be what we thought would be. So then we had to readjust the company. And speaking of COVID, we do have a threat in bird flu. Is that the next pandemic? You know, maybe we should be, I don't worry, but we should be careful and we should be monitoring it. There is a big difference.

The difference is that it's not transmitted from human to human so far. and it is difficult to transmit from animals to human. Of course, we had the first cases that that happened, but the fact that you can transmit it so far, humans to humans, is very encouraging. Now, that can change, and that's what we need to watch. We have a question from Brian. Yes?

Yeah, Albert, thanks for joining us. Brian Selvety Kelly Evans back at Engwood Cliffs. Listen, according to the CDC, you've got about 21% of people who have taken the updated COVID vaccine, about 9% saying that they're definitely going to get it. How do we reinvigorate, for lack of a better term, confidence in vaccines generally? Because we're seeing some of the COVID vaccine concerns spill over now into other vaccines. How do we regain people's confidence in vaccines generally when, let's be honest.

A lot of people know people that had COVID got a vaccine, either still got sick or got injured. You're right. And I think the fact that we have low vaccination rates in the U.S., is going to contribute to have probably a little bit more COVID and more severe symptoms as the population immunity will wane. I don't think that people are not getting right now, we have a reduction in the vaccination rates because they have concerns with the COVID vaccine.

There is a population that has concerns with COVID vaccine. They never got that vaccine. But the vast majority, they got the vaccine, is just that they don't feel compelled to do it because they don't feel the need, because, of course, we have controlled COVID so far. and because also there is an oral treatment. So right now we have even higher scripts and utilization of PaxClovit,

which is, let's say, our roller treatment, because every time that someone has COVID, it's very highly correlated with how many scripts we have. And I know you don't want to talk about obesity too much because you feel like you've been burned in the past, but people do want to know how committed you are to the space with, you know, whatever happens with Daniel Liklipron. So what can you tell us about, you know,

how you view that market and how much you want to invest. I think it's a very important market, first of all, because addresses a significant health issue, which is the obesity. I would say that after the COVID pandemic, we have the obesity pandemic that we need to tackle. And that creates significant not only lifestyle issues, but also creates significant health issues. I think science tried for many years to find solution,

and the GLP-1s are a very good solution so far. And we are having also a GLP-1 oral, because the current solutions are injectables that we are developing. But I think also that we are scratching the surface. I think there are also new, there's a lot of activity with new molecules, new mechanisms of action, that also will take over eventually in obesity. I think it's good times for people that are living with obesity because there will be a lot of solutions. Well, we'll look forward to hearing more from you there.

That's all we have time for Brian. Back over to you. Angelica Peoples and Pfizer CEO Albert Boyla. Just a reminder, we are now accepting nominations for the 13th annual Disruptor 50 list of private venture-backed companies. You can scan your QR code, Kelly. If you're driving, don't. Well, first of all, I should be watching anything. Don't scan anything because you can go to cnbc.com slash disruptors. When you get home on deck here on power lunch, more on the market side. Big tech getting smacked around along with your money. Stick around. Welcome back five days. That's how long Americans may have left to enjoy TikTok. Unless the Supreme Court takes action to prevent the shutdown, the argument from the U.S. government is that TikTok presents a national security risk and that the Chinese-owned company is stealing user data.

But officials hopes to keep that data away from Chinese companies, well, that might be backfiring. Because one platform Americans are moving to as the ban approaches is red note. Yes, red note. The twist is it's also Chinese-owned. And it has quickly become the most downloaded free app on Apple's App Store, where these users, Brian, refer to themselves as TikTok refugees. I'll just say this.

There's a new app that a lot of people that left Twitter slash X called Blue Sky and threads. People have heard about them. It's hard to gain traction. If you've got a million TikTok followers, you don't just slide over to Red Note or Lemonade or some of these other ones. It takes years to build, as I'm learning the hard, I'm on all of them. And with, you know, I'm not going to, it's hard to go back and say, you know, I'll start at zero. And also, if you want TikTok because it's an enjoyable kind of entertainment product, you can sit back. Now, I can't ever use it because I can never have the volume up.

But if people want to sit back and scroll videos, the only real proxy that replaces that are reels on, met on Instagram, which they've done a pretty good job. It's getting there. It's not there. It's not there yet. And then YouTube shorts. So, you know, there's really not a one-for-one experience right now. And if a Chinese app steps into the void, I mean, what are we? going to do then? Well, there's going to, listen, I don't know what people are thinking. The idea that

TikTok is banned is because it is effectively an arm of the Chinese government. People on TikTok are not arms of the Chinese government. But bite dances is in China, which every Chinese corporation, to an extent, is controlled by their government. In the questioning on Friday, the concern actually wasn't so much from officials about whether it was the, whether they were using the algorithm to sow dissent or discontent in the U.S. because that would be a really, difficult thing to set a precedent on. It was really more narrow about the issue of harvesting contact information off people's phones. If you open the browser and TikTok, collecting that data. It's a phone, it's a microphone and a video in your house. That's where they could put it.

So if these other apps allow for similar types of things or if we find out that they allow, now the question is, would they proactively, preemptively try to stop people from doing? That's a whole different story. So if not, then they might flock to the next platform and then have to deal with this all over again. The next and then the next and then the next. It's going to be amazing 20 years when phones don't even exist. Everything is done through like a ring or a watch. All right on deck, it is your three stock lunch and more on why some big tech stocks just keep going down. But there's always opportunities out there, as Jim likes to say, and Matt Maley will be your guest coming up.

All right, we called three stock lunch where we hit three different stock stories and why they may matter to you and your guest today is Matt Maley. He is Chief Market Strategist at Miller Tayback. Matt, love having you on Power Lunch. Here we go. You ready? All right, first up, United Health, it is up, along with other insurance carriers. It is helping to boost the doubt. This, after the federal government posed an increase to Medicare reimbursement rates for 2026. The stock is up 4.44 percent. Your take on UNH. Yeah, I think it's, it needed this good news. I mean, we know what happened a little over a month ago with that horrible shooting of Brian Thompson, but that wasn't, you know, that was only part

of the reason why it went down. I mean, They brought a lot of exposure about how many they weren't paying some of the, you know, making or okaying payments for some of their procedures. And people worried that, you know, they would lose a lot of business because of this. And the stock got oversold and it bounced back and it was only, hey, it's only just a technical bounce. But now we have some good news. And so that, I think it will help the stock and help the stock hold up because, let's face it, the market's in a little bit of a, you know, uncertain area right now. And people are looking for defensive areas. And health care is certainly one of those.

And United Health Care is one of the leaders in that group. All right. Let's move along then to Abercrombie, which for all that we hear about the strong December retail spend and the shopping season, I mean, the stock's down 17 percent. And they even had decent holiday shopping demand and raise their Q for profit outlook. But apparently that outlook wasn't good enough. What do you do? Yeah, I'm a little surprised by the size of the decline today, down 17 percent, the last I saw.

And, you know, the one thing that I'm concerned about, is that, you know, we've seen for a while, we've been able to fight off the consumers be able to fight off the fact that credit card debt is, you know, at all time highs. We have, you know, big increase in consumer credit delinquencies and such. But the thing that's really starting to concern me is that the household debt as a shared disposable income is now back to where it was before the pandemic. So people don't have as much money to spend, and you still worry that they're going to be spending it on the experiences rather than on hard goods.

And so even though I wouldn't necessarily be selling a stock down this much, it's not one I'm going to be buying on it taking a big advantage of a buying on a week because I think the thing could stay down for a lot. All right. Final name is Howard Hughes. The CEO, David O'Reilly, is a friend of this show, front of the network, Bill Ackman proposing a deal to merge with Howard Hughes. Some say, Matt, it creates the next Berkshire Hathaway. Your take? Yeah, that's what we're hearing about. And, of course, Bill Ackman's got a very good track record. I mean, every great investor. over time has had some bad investments. So you never know how this one's going to work out. But I do this idea that the Howard Hughes Company has with the master plan communities is a very interesting one. I mean, Florida, these people, we have tens and hundreds of thousands of baby boomers are retiring. It's expensive to retire to Florida now. The prices are shot up because of the pandemic. And, of course, the insurance prices are through the roof. So I think

these things will work real well. But the one thing you do have to worry about with the stock is that it's, you know, it's going to be a risk guard name. So it's probably not going to move more to the near. Matt, hate to jump in like that, but we've got 10 seconds in the show. Matt Maley, always love having you on. I can't talk any faster. But I can say thanks for watching Power Lunch. And we'll see what the market does.

And we have three seconds. Closing bell starts right now.